Our firm uses the DISC behavioral approach in almost everything we do. We teach teams to understand their own natural communication styles and to adapt when they are communicating with those who have different observable styles. We use DISC in sales training classes, in selecting our own team members, and in helping others resolve conflicts. It is a tool (which regularly involves exercises with crayons) that aids us every time we attempt to share or explain financial statements or tax returns.
But DISC is also a valuable aid for writing. Once you accept the fact that your audience may exhibit one of 4 main behavioral traits or a mix of several, and you understand that your own natural style may differ from the style of your audience, you have to change your approach to writing. You can’t write the same way for four different audiences.
The four letters of DISC represent the four main behavioral styles:
- Dominance – results oriented, data driven
- Influence – relationship oriented, people driven
- Steadiness – cooperation and security oriented, people driven
- Conscientiousness – quality and accuracy oriented, data driven
Those exhibiting high D and high I behaviors tend to be extroverts with short attention spans, while the high S and C’s tend to be introverts with a need for detail and proof. (Many people are blends of different styles but for now we will focus on the extremes.)
Here’s how I might apply what I have learned about DISC to writing a tax article. Here’s one I just published [1].
The high D is going to want me to quickly get to the bottom line. For this reader, I include a two sentence executive summary at the top. I also make sure to include headers that enable a quick read of the pertinent information.
New rules allow for increased current year deductions (main header for the high D, who will browse the sections, get to the bottom line, and move on.)
I added subheaders on each section
The Law
In September of 2013, the IRS issued a set of regulations designed to address the tax treatment of amounts “paid to acquire, produce or improve tangible property.” These regulations included a host of rule changes and filing requirements along with hefty implications for failure to comply. But they also included a set of “de minimis” (meaning minimal or trivial amount) exceptions to the sometimes onerous requirements that would allow deductions for current year expenditures.
Safe Harbor
In the case of expenditures for tangible assets, different de minimis rules apply:
- If you had what the IRS called an AFS (Applicable Financial Statement which is generally an audited financial statement), you were allowed to deduct up to $5,000 of qualifying investments in tangible property. Among other requirements, the IRS mandated that the same expense treatment (full current year write-off) apply to financial statement reporting. So if you deducted a $5,000 equipment purchase for tax purposes, your current year audited income statement must also reflect the full $5,000 of expense.
- For taxpayers without audited financial statements, the IRS offered a $500 per item or invoice safe harbor threshold. This meant that qualifying asset purchases of $500 or less could be expensed in the year of acquisition. And these purchases, if otherwise qualified as business expenditures, would not be subject to IRS audit under the capitalization rules.
Outrage
The $4,500 disparity between safe harbor deductions came down to the difference between those who could afford an audit and those who couldn’t. Small businesses and the American Institute of Certified Public Accountants cried foul.
Response
Based on what one an only imagine must have been a horrific outcry from the general public, the IRS has now decided to allow all taxpayers a safe harbor of $2,500 per item or invoice for deducting expenditures “made for the acquisition or production of newly acquired property or for the improvement of existing property, which otherwise must be capitalized”. These safe harbor amounts technically apply for tax years beginning January 2016 or later, but they can also be applied to prior tax years without fear of reprisal in the event of an IRS audit.
The high I is going to want a human interest angle. I need to find something unusual to point out for this person. Note my reference to the author of the tax notice, Christine.
And why Christine Merson is my hero of the day. (subheader with human interest angle for the high I)
It’s not every day that someone representing the IRS’s Office of Associate Chief Counsel makes it to my list of heroes but today is a special day. You see, Christine Merson of the IRS’s office represents hope that other members of government agencies might be willing to look beyond the halls of their own hallowed institutions and consider the perspective of real businesses and the companies they serve. It seems Christine is a rare breed of bureaucrat who actually listens to reason.
The high S is going to know how it affects them and what the implications are for their current way of doing things. For this audience, I will add a section called “What to do” or “How this impacts you”.
Hence this section in purple :
Time to Update your Policy
The IRS rules require that, in order to take advantage of the de minimis exceptions, each business must establish a capitalization policy at the beginning of each year. Companies who have a current policy of capitalizing asset purchases of $500 or more per item or invoice may be eligible for a raise in this threshold. Make sure to establish your 2016 threshold before the year begins. Consult your tax professional to discuss the capitalization policy appropriate for your business.
For the high C, I’m going to have to prove it. They will want facts and support. I will make sure to use footnotes for anyone wishing to check my facts.
So I added this information:
“Having considered taxpayers’ comments, the goal of the final tangible property regulations to reduce administrative burden, and the concern that taxpayers’ methods of accounting clearly reflect income, the de minimis[i] [2] safe harbor limitation for a taxpayer without an AFS (Appropriate Financial Statement) is increased from $500 to $2,500.”[ii] [3]
_________________________________________
[i] [4] § 1.263(a)-1(f)(1)(ii)(D)
[ii] [5] These rules will be published as Notice 2015-82 on December 14, 2015.
By considering the needs of different audiences, you can increase the likelihood that your important content will actually be read. In this case, I need business owners to take note of an important business deduction before the end of the year.
Thank you to those of you who read all the way to the bottom of this post, I am pretty sure you aren’t high D’s.